Ladies and gentlemen, thank you for standing by and welcome to the RenaissanceRe's Fourth Quarter and Year-End Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to Keith Mccue, Senior Vice President, Finance and Investor Relations. Thank you. Please go ahead, sir.

Good morning. Thank you for joining our Fourth Quarter and Year-End Financial Results Conference Call. Yesterday after the market closed, we issued our quarterly release. If you didn't receive a copy, please call me at 441-239-430, and I will make sure to provide you with one. There will be an audio replay of the call available from about 01:00 pm eastern time today through midnight on February 26th. The replay can be accessed by dialing 855-859-2056, U.S. toll free or 1404-537-3406, internationally. Passcode you will need for both numbers is 2256505. Today's call is also available through the Investor Information section of www.renre.com. And we archived on RenaissanceRe 's website through midnight on February 26th, 2022. Before we begin, I'm obliged to caution that today's discussion may contain forward-looking statements and actual results may differ materially from those discussed. Additional information regarding the factors shaping these outcomes can be found in RenaissanceRe's SEC filings to which we direct you. With us to discuss today's results are Kevin O’Donnell, President and Chief Executive Officer, and Bob Qutub, Executive Vice President and Chief Financial Officer. I'd now like to turn the call over to Kevin. Kevin? Kevin O’Donnell: Thanks, Steve. Good morning, everyone and thank you for joining today's call. For investors, and many of our Capital Partners, 2021 was a difficult year. The insurance industry experienced its fifth consecutive year of elevated catastrophe losses, which by several estimates exceeded a $100 billion in insured loss, and a continuation of the themes of climate change, rising inflation, and the increasing occurrence of secondary barrels. We saw these themes repeated in the fourth quarter, with severe convective storms causing widespread damage across the Midwest and wildfires impacting Colorado. In contrast to the year’s catastrophe losses and in part due to them, we had…

Thanks, Kevin. And good morning, everyone. We finished the year with a strong fourth quarter, reporting an annualized operating return on average common equity of 14.4%, despite recording a net negative impact of $53 million from weather-related large losses. Both our segments were profitable with Casualty in particular, performing well. For the year, our results were impacted by an elevated level of catastrophe and we reported an operating return on average common equity of 1.3%. I want to start my comments today discussing the platform we've built and how we have the capabilities and scale needed to generate superior returns. I'll then cover our capital management activities in the three drivers of profit in greater detail. Starting with the platform, which generates diversifying earnings streams for our investors from three drivers of profit. And to put this in perspective, 2021 was the second highest loss year for natural catastrophes in our industry's history, we are estimating -- which are estimated to exceed a $100 billion. In a year like this, you can see the power of the platform we have built. We reported a modest operating profit where we were able to absorb net negative impact from current year catastrophes of nearly $1 billion because of our larger and more diversified business. In the fourth quarter, industry cat losses were about the 10-year average and well above the medium. Even with weather-related large losses of $53 million, we reported a 14.4% operating return on average common equity. Our property book readily absorbed the quarter's volatility with a 64% combined ratio and our casualty book performed well for the 93% combined ratio. We achieved these quarterly results with relatively modest fee and investment income. As we look forward, we believe that each of our three drivers of profit is poised to…

[Operator Instructions]. We do ask that you limit yourself to one question and one follow-up. Your first question is from Elyse Greenspan of Wells Fargo.

Hi, thanks. Good morning. My first question, Kevin, goes to some of your comments that you just shared at the end of the prepared remarks. You talked about higher average profit and capital efficiency of your property book at one-one. Can you just maybe dive into that a little bit more and just give us a sense of the return profile of the business that you wrote? This January 1 versus last year, just to give us a sense of the expected return that we could see over the course of this year. Kevin O’Donnell: Thanks, Elyse. Sure. There has been a lot of press about what the rate change was at 1-1, and in general, I think it's been reasonably accurate as to what our observations have been. Our objectives at 1-1, were not simply to write more because rates are up. We were looking at the underlying reasons why rates were changing and trying to think about how we can best optimize our portfolio knowing rates were going to be improving. So when going into the renewal, we recognized supply would be constrained, more constrained for retro and aggregates than potentially other covers, and that demand was going to be increasing. Looking at the opportunity that we had with the growth and the incumbency that we had on programs, we recognized that by restructuring into the improving market beyond just price, we could take advantage of building a better and more efficient portfolio. We increased our capital in DaVinci and increased our share of CAT to DaVinci. With that, we've created room for us to continue to grow into 2022 as opportunity continues to present itself. So I think it's a more nuanced question for us than simply thinking about rate change and how to leverage into a better market. This has been a two-year journey for us to build options into how to construct our portfolio. In general, larger portfolios create more opportunity for us to think about how to spread risk across our platform. And when I look at all the things that we set out to achieve, between holding PMLs relatively flat for our own balance sheets, thinking about restructuring aggregates, increasing our view of risk, particularly for Atlantic hurricane, and then thinking about secondary perils. I don't think we could have had a better renewal or constructed a more efficient portfolio. So when I look at where we are in 2022, I couldn't be happier with the portfolio reconstructed, I think we'll have more opportunities as we head into the second half of the year.

That's helpful. Thanks, Kevin. And then my second question relates to the potential capital changes put forth by S&P. Just a few parts to this one. First of all, is your internal model, the binding constraints on your capital or S&P? Then second, as things stand today, would you be required -- would your required capital, under the new model go, up or down? And the last question there is, do you think the changes to the capital model could be meaningfully -- could lead to a meaningfully increased demand for reinsurance? Kevin O’Donnell: Yes. Let me start with your last question. The model changes in past have created opportunities to sell more, CAT cover in particular. I'm not sure that this model change will create the same opportunity but we're certainly looking at the effects on our own balance sheets as well as opportunities presented in the market. Our internal model is how we continue to manage our business and build our portfolios. We've spent in an awful lot of money over the years, and have deep understanding of the way in which we write property cat and manage it. So in that, we'll continue regardless of what changes within the S&P model. So when I think about it, there are in the early phases of the adoption of the new model. We are looking to see if they can create opportunities. I think the bigger opportunity for growth in property cat will potentially be from the lack of retro that's been available and the shift in primary companies purchasing to have fewer aggregates and higher retentions, which will impact income statements. I think that might be a driver for potential new demand, but S&P certainly can contribute to that. With regard to our required capital that -- Bob, talk a little bit more specific quickly about that.

Yeah, that's a good question and timely too at least. It is -- this came out last month, frankly, for the holidays and we're just now getting a chance to try and understand it. I'll just say we haven't seen all the technical that go behind it. There's a lot of different things there and we're not getting focused on one thing, like debt. We don't underwrite against our debt. There's a number of different factors and considerations that we're looking at now and then we have a common period that extends through the end of February. We're working with other trade groups as well to make sure we understand it and [Indiscernible] on how we can react and comment back to S&P later on in this process.

Okay. Thanks for the color.

Thanks.

Your next question is from Meyer Shields of KBW.

Thanks. Good morning. I'm hoping you can clarify. And you gave us a lot of information, but you talked about a broadly flat Property book and roughly stable PMLs. So hoping you could reconcile that with the expectation that the book of business improved overall? Kevin O’Donnell: Yes. Remember that we had a lot of changes in the portfolio. In thinking about added constructor, we reduced the size of Upsilon, materially. We wrote those contracts that more on an occurrence basis, which fit our rated balance sheets that created opportunity for us to think about, what are the optimal programs to retain and what are the optimal programs to continue to press for rate. So when I think about the holding of our PMLs flat, that's on our retained business. And we're being paid more for the risks that we're taking. We have changed our view of risk, so when I'm talking about changing the stable PMLs, it's on an elevated view of risk. But all that said we are being paid more for the same level of risk, and we have ample excess capital to continue to leverage into the market. One thing is I'll say is the binding constraint for a portfolio that's heavily skewed to Property CAT typically is Southeast Hurricane. And much of the Southeast Hurricane, absent the other Property portfolio that we write, comes up after 11. So depending on where rates go, we can revisit the decision to hold PMLs flat, which judging from where the market was in our ability to improve the capital efficiency of the portfolio and the profitability holding PMLs stable, is the right call.

Okay. No, that's helpful, thank you. If we turn to the Casualty and Specialty, but we've seen decent amount of loss ratio progress, and I was wondering whether you could break that down. How much of that is sort of a true-up or true-down for the first nine months of 2021? And how much of it is just the meeting of the minds between pricing and reserving actuary?

It's good question. We talked a little bit about this last quarter. We talked about the three percentage point in the current accident year reduction going forward. That's really -- I think that's the convergence of the reserving and pricing actuaries. We have to go through a development period and about a third of it, we wait, hold back, the actuaries will look at it and then made the positive adjustment going forward. We talked about that. The last call, and I'm trying to reiterate that for 2022 in my prepared comments. Other could be noise that can happen, but that's kind of the baseline where we're starting.

Okay. Excellent. Thanks so much.

Josh, your line is open.

Thank you. Hi there. Meyer kind of asked my question but I just want to understand something and he [Indiscernible] question. Was there, the first nine months of the year, intra -year reduction that went into the [Indiscernible] to depict this for this fourth quarter or is that based mostly on loss incurred in 4Q '21?

Actually, Josh that is Bob and thank you. There was actually a third quarter adjustment that we made and we talked about it on our call in November. So that was a midyear change in the convergence going back to accident years, and when we started to see the rate increases in 2019, 2020. So that's what we're carrying forward into the fourth quarter. And now we're going into 2022, we're still the same.

Good. My only comment, I guess, is not that it's going to be just a perfect situation every quarter, but it's a whole lot more improvement than 300 basis points. I'm just wondering if you guys are ahead of plan?

Last year, I think when you look at it from a year-over-year, we had I think four or five points of cat -- 4.5 points of catastrophe impact on the loss ratio for casualty. And so that would have actually raised it up higher. So you have that factor that and when we had 1% -- one point for the year on casualty. So that does create a little bit of noise in there, Josh.

And that's wild for reliability?

Yeah. We are focusing -- what I wanted to focus you on in my comments, adjusting for the operational and acquisition is that we're looking at the mid-90s plus or minus, they're from a combined ratio. Kevin O’Donnell: Nothing changed in our approach to casualty and specialty.

Okay. That helps me and I'm going to go back and try and put some catastrophe into the casualty and see what I come out with. Thank you.

Your next question is from Michael Phillips with Morgan Stanley.

Thanks. Good morning. I guess I wanted to touch on your philosophy on, I assume that there was no reserve release from the initial sets that have been our reserves set up last year for COVID reserves. So I'm just going to talk about your philosophy behind timing of releasing any of that? Kevin O’Donnell: I missed something. Did you say COVID?

Yeah. Your COVID reserves that you set up last year, I think it's somewhere $200 million, $300 million. I believe it's still the case and still in IBNR. So what's your thoughts on when that gets released, timing around that? Kevin O’Donnell: I think, if we review our COVID reserves each quarter, we did a fulsome review in the fourth quarter, we feel like we're in the right place. The world is developing differently, and if you look back as to how we initially reserved go of it, we had three categories. The first category was more transparent covers, such as, event cancellation. I'd say, that is paying out in developing kind of as expected. The second was more about adjustments to lines that could be affected for COVID. I'd say, we've seen a lot of that's more U.S. exposed. We probably continue to see favorable trends there. But that's not the biggest component of the reserve and then the third piece is the -- is the property portfolio and the uncertainty around business interruption. The U.S. continues to have favorable news from the challenges to those coverages. But I think we're still in the early innings. Europe, there has been more explicit coverage and more payment. When we review it, we feel like we're in a good spot. It's part of our normal reserve process and we don't have an anticipated scheduled to make changes to it. We'll do it as we learn more in need to make adjustments.

Thanks, Kevin. That's helpful. A pretty broad and then I apologize here, pretty broad question here. But we got kind of mix signal from casualty primary writers over where the next few years might be added for that book of business in general. Not really one in specific. But can you talk about how you see the demand for casualty reinsurance this year and next year possibly versus what it's been in the in recent years, is the demand for casualty reinsurance changing at all? Kevin O’Donnell: I think that can be a longer conversation as we break it down, there's a lot of lines in Casualty, as I mentioned in my comments, we think of Casualty Specialty as a segment. We're seeing enormous demand for credit, sorry, for credit, but I meant to say cyber. And great increase, I don't think that's going to abate anytime soon. When I look at the Casualty environment, I think there is probably a continuing trend of rate increase at a decelerating rate. I think that from a reinsurer's perspective, I touched a little bit on higher ceding commissions. I think there could be some pressure on ceding commissions if rates fail to continue to increase. With that, companies may retain more, so to your demand question, there might be less demand for casualty reinsurance if rate flattens and reinsurers put pressure on ceding commissions. I think we're in a strong enough position with the relationships that we have that we're less likely to be affected in the early stages of that change. We've been disciplined portfolio managers against all the lines of business that we write, we'll continue to monitor it, we'll think about ways in which we can build more flexibility on our casualty platform for sharing risk so that we can maintain the same flexibility in that business as we've had in our property business as well.

Okay. Thank you, Kevin. I appreciate.

Your next question is from Brian Meredith of UBS.

Yes, thanks. A couple of ones here for you. First, Kevin, I'm just curious, what's your thoughts with respect to alternative capital and demand from investors, as we look towards midyear renewals. Will trapped capital be freed up? I mean, you were somewhat unique obviously in your expertise on an alternative capital. But do you expect to take investor demand to increase given the price increases you saw at 1-1? Kevin O’Donnell: So as you said, there's a few questions there. So with regard to trapped capital, it's been a difficult year for particularly the more volatile funds, so those that are exposed to retro for the past several years. Some of the older years there might be some role of capital but I don't think it's going to be meaningful. I think investor skepticism is extremely high. And I think there is an -- if you look at where we're -- I'll separate us from the market for a second. Investors are flocking to CAT bonds, and if you look at the spectrum of transparency and simplicity to enter a CAT market, to take diversifying risk, CAT bonds are a good place to do that. As you move through the spectrum of reinsurance and then all the way to retro, the lack of transparency and understanding diminishes materially. And I think there'll be continued skepticism at the more risky end of the risk perspective from ILS Investors. That said, I think a company like us, with our track record and with the flexibility of our platform, we maintain opportunities for ILS investors to continue to deploy across our platform. We've increased with Medici. We've increased DaVinci, Upsilon as anticipated is reducing. So I think we still have opportunities for third-party capital, but I think it's going to be a difficult year for our third-party capital managers to continue to solicit funds.

Great, thanks. And Kevin, my second question is, and I know I think Elyse asked it and Meyer kind of asked it also, but I just want to clarify this. So I'm just curious, if rates were up nicely for property CAT at one-one, better book of business, why would you raise more capital at DaVinci? Why wouldn't you retain more of it yourself? Is it that you want to keep some more dry powder for mid-year renewals? I'm just curious given that the business is better this year than it was last year. Why would you put more to DaVinci and why not keep more net yourself? Kevin O’Donnell: It's a great question. I think if you look over two years and look at the growth that we've achieved, we feel really comfortable that we built ourselves into this market with great skill and effectiveness. From the DaVinci perspective, we did raise some capital in DaVinci but we saw an opportunity to continue to add risk to that portfolio and optimize it even further, more in line with the growth that RenRe Limited and some of our other vehicles have achieved. Additionally, we reduced Upsilon which created a pool of incumbent risk for us that we had the opportunity to restructure and bring to the limited balance sheet and the DaVinci balance sheet. So it's not a single grow here and not there. It was a multi journey -- multi-year journey from when we raise the billion dollars in '22 thinking about how to optimize it in this renewal which saw as I said significant rate increase and a reduction of supply which provided more flexibility for us to move the portfolio around and optimize.

Makes sense. Thank you.

Your next question is from Ryan Tunis of Autonomous Research.

Hey, thanks. Good morning. I have a couple on capital. First one, thinking about the Other Property line and just the marginal capital requirement of ready more of that business, because that's still growing nicely, you only think about the marginal capital requirement in terms of what it does to your PMLs or is there attritional consideration alongside that? Kevin O’Donnell: The Other Property portfolio, is much more reflective of the economics of our primary portfolio, so we definitely consider the Attritional element of that portfolio. When we split it though, we do keep secondary CAT perils in the Attritional side of the development. And the CAT component of the pricing is strictly for major perils like earthquake and hurricane. So the Attritional is a little less clear, than what it would be on stream slip and falls and fires. We have some CAT in that as well.

And given how much that book has grown, Kevin, I guess you saying your PML is flat. What percentage of that PML is emanating out of the faculty -- the other property book versus [Indiscernible] at this juncture, is it most of it or is still substantially all the PML coming from property cat, [Indiscernible]? Kevin O’Donnell: I don't have that number in front of me, but I can tell you how it works. From the other property portfolio is more of a proportional participation in the property market. So if we think about the excess of loss portfolio that we're writing on the CAT side, there's going to be greater concentrations of CAT x oil layers at the more remote return periods. And at the most frequent return appearance, other property will have a more dominant portrayal in our capital utilization. So when we think about it, we are constantly optimizing the return we're getting on a marginal basis between other property CAT and then also within other property deals. And we're thinking about the best way to allocate into the portfolio to make sure that we're efficiently using the full distribution of outcomes. So it's a slightly different answer across the portfolio but property CAT at the more extreme levels are the more remote return periods dominates the curve.

So thinking about wanting to keep the PML flat, or maybe just a little bit up this year that doesn't really put a gating item on growth and Other Property that's really just much more of a consideration with property CAT? Kevin O’Donnell: And the other interest of highlight is we reduced our footprint in the aggregate market, which creates room in the property CAT, but also creates significant room in the other property portfolio. So we got a lot of things moving around to make sure that we can continue to grow where we see opportunities. And then we can share risk differently in other Property compared to Property CAT which is the retro market where its constrained. So we feel --

Got it. [Indiscernible] Sorry, just shifting gears. Kind of a bigger picture one. So the plan is to return capital at the pace of earnings. So we'd be thinking to have a flat capital base at the end of this year. Is your thinking that the capital base you have today can kind of support a historical level of RenRe growth over the next few years? You have that level of excess, maybe not super outsize, but the thinking is we can continue to grow our casualty book, grow other property, maybe grow our PML is a bit for next few years just given the capital base we have, is that kind of the way you're thinking about it in the medium-term or what do you need to build your balance sheet a little bit more to make that a reality? Kevin O’Donnell: We built a portfolio that we're proud of and the growth that we've achieved over the last two years is not really our objective in 2022. Our objective in 2022 is to continue to optimize that portfolio and maximize its capital contribution or its profit. From a capital perspective, casualty still does not constrain us so we have opportunities to grow casualty. From a property perspective, our first objective is to deploy into markets where we see it accretive to returns over the long-term and then secondly, to manage it effectively through share buybacks or whatever. Nothing has changed there. We also feel like we have, as I mentioned in my earlier comment, very strong access to capital. So we do not feel constrained by growth. The decisions we're making about how to construct the portfolio are active decisions, we're making as to what is optimal to produce the highest return for our shareholders.

Your final question is from Jimmy Bhullar of JP Morgan.

Hi. Good morning. So I have a couple of questions. First, you obviously bought back a decent amount of stock last year, but you had gone into the year with a lot of excess capital, I guess, because you raised about $1 billion the year before. How do you think about your capital levels now and whether you still have on-balance sheet excess capacity that might be used towards buybacks or are buybacks and dividends going to be -- or buybacks going to be dependent primarily on the free cash flow that you generate going forward?

I think we characterized it, this is Bob. We did start the year for two reasons, we raised a billion dollars in capital back in June of 2020 but then over the course of 2020, we earned about another a billion dollars through the investment portfolio. So we came into the year with a very strong capital position which allowed us to understand the risks that we're going to underwrite coming into 2021 and over the course of '21, allowed us to return that capital back. We finished last quarter with the excess capital we talked about. Now we still remain near the high end of that range that we've talked about where we we're at last year. So we do have sufficient capital to be able to invest in the business or find opportunities that we can deploy it to and yet at the same time continued in return earnings. That's -- we have the ability to do that. Things can change. We can see opportunities; we can find areas where the mid-years could be better. But right now we feel comfortable where we're at with the capital position.

And then how should we think about the pace and magnitude of the recapture of DaVinci fees? Kevin O’Donnell: As I put in my prepared comments, the management fees are going to start to come back here in the first quarter, we'll recapture that. That's pretty straightforward. On the profit commissions, there is basically DaVinci has got to come back into profitability. So towards the back-end of the year is going to see the profit commissions coming in.

Okay. Thank you.

We have no other questions in queue. Kevin O’Donnell: Thank you for joining the conference call today. We appreciate your time. Just in closing, I think we executed extremely well into a rising market, it's been a multiyear journey. The decisions we've made about how to construct the portfolio, increase the capital efficiency and profitability will serve us well throughout the rest of 2022. Thanks for joining the call and look forward to talking to you next quarter.

Ladies and gentlemen, this concludes today's Conference Call. Thank you for your participation. You may now disconnect.